In the midst of recent Drexel’s Apple Monitor index performance results for Apple Inc. (NASDAQ:AAPL) and GoPro Inc’s (NASDAQ:GPRO) third-quarter earnings release, analysts are chiming in on these tech stocks with varied perspectives. Whereas the analyst from Drexel breaks down statistics from his Apple Monitor and makes a bullish case for AAPL as his top pick for the second half of 2016, the analyst from Pacific Crest remains sidelined on GPRO on back of a less-than-stellar results coupled with underlying concerns for lofty corporate expectations.
Let’s take a closer look:
Drexel Hamilton analyst Brian White maintains confidence on Apple, although he notes that this morning, October sales and results for companies in his Apple Monitor index, which tracks sales of nine ‘important’ publicly-traded Apple suppliers based in Taiwan, performed under historical averages for the month. However, sales and results did see a month-over-month rise.
As such, the analyst reiterates a Buy rating on AAPL with a price target of $185, which represents a 68% increase from where the shares last closed.
White asserts, “We believe the recent 8% correction in Apple since the company reported 4Q:FY16 results a couple of weeks ago represents another attractive buying opportunity.”
Moreover, with regards to Apple Monitor performance, the analyst notes, “Preliminary October sales (92% of total sales) for our Apple Monitor rose by 5-6% MoM and slightly below the average increase of 7% over the past eleven years. Recall, this performance comes after the strongest September quarter ever for our Apple Barometer. Over the past five years, average October sales for our Apple Monitor have risen by 6% MoM.”
Looking ahead, White commends the tech giant’s “strong” launch for its iPhone 7/7 Plus rollout and has confidence in India as “the next big iPhone market that could open up for Apple,” with the chance to yield $10 to $15 billion in yearly sales by the financial year of 2021. Just two weeks ago, AAPL announced that Reliance Jio is bringing forward an all-IP network with 4G coverage in India, in which 18,000 cities coupled with 200,000 villages will have access.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Brian White is ranked #101 out of 4,162 analysts. White has a 56% success rate and realizes 8.2% in his annual returns. When suggesting AAPL, White garners 18.7% in average profits on the stock.
TipRanks analytics exhibit AAPL as a Strong Buy. Based on 34 analysts polled in the last 3 months, 28 rate a Buy on AAPL, 5 maintain a Hold, while 1 issues a Sell. The 12-month price target stands at $130.47, marking a nearly 20% upside from where the stock is currently trading.
When it comes to GoPro and its third-quarter print posted November 3rd, Pacific Crest analyst Brad Erickson‘s reaction is “Well, fine,” considering quarterly results were weak and the action camera giant’s fourth-quarter outlook underperformed consensus. Though management has higher hopes for 2017, Erickson believes guidance “looks optimistic” and is worth discussion.
As such, the analyst reiterates a Sector Weight rating on shares of GPRO while listing a fair value range of $9 to $10, which represents just under a 21% to a 12% downside from current levels.
Erickson opines, “After missing Q3 and guiding Q4 below expectations citing production issues, GoPro guided for double-digit growth in 2017, which appears optimistic. We’re open to changing our view if our checks improve, but for now, we maintain that action cameras are largely saturated and see the shares as fairly valued between $9 and $10, consistent with our views since April.”
Especially with “soft” third-quarter results underway “reinforcing that view,” the analyst has all the more reason to point to saturation of the action camera market as a chief concern, considering product shipments saw a significant decline. Though Erickson agrees with corporate assessment indicating fourth-quarter will exhibit improvement, he still believes an over 15% guided unit surge could very well be too good to be true.
In reaction to the print, the analyst cut 2016 projections, underscoring the “Q3 unit miss and the drone delay,” but maintains 2017 unit and ASP assumptions. Additionally, the analyst boosted 2017 EPS expectations, taking into account GPRO’s promise to lower operating expenses (opex) by 10% year-over-year by reducing spending in non-revenue producing aspects.
Overall, “Drones could help drive growth in 2017, but we think no more than a few hundred million dollars. With GPRO trading off 20% after hours, our Sector Weight rating is predicated on (1) action camera volumes being limited to the 4 million to 5 million unit range per year, (2) GoPro only gaining limited share of drones and (3) management’s ability to drive a return to profitability by rationalizing cost,” Erickson concludes.
As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, one-star analyst Brad Erickson is ranked #3,644 out of 4,162 analysts. Erickson has a 48% success rate and confronts a loss of 6.9% in his yearly returns. When recommending GPRO, Erickson earns 0.0% in average profits on the stock.
TipRanks analytics indicate GPRO as a Hold. Out of 15 analysts polled by TipRanks, 3 are bullish on GoPro stock, 9 remain sidelined, and 3 are bearish on the stock. With a return potential of 5%, the stock’s consensus target price stands at $11.75.